Agency Brief: The latest on the media-buying FBI probe

The Robert F. Kennedy Building in Washington, DC is the headquarters of the U.S. Department of Justice.

Credit:
Courtesy Department of Justice

Yesterday, the Association of National Advertisers published
a new whitepaper on the topic of the U.S. Federal Bureau of
Investigation's probe into agency media-buying practices.

The document touches on many of the issues my colleague E.J.
Schultz
reported on when the ANA's top lawyer Doug Wood discussed the
topic during the organization's Masters of Marketing Conference
in Orlando earlier this month. "It may turn out to be nothing is
wrong," Wood said then, but "it could turn out quite the
opposite…we'll know that in the next six months to a
year."

The FBI investigation concerns allegations that agencies engaged
in non-transparent practices, including collecting cash rebates
from media vendors and not passing them along to clients. The probe
was sparked in part by a 2016 ANA report conducted by independent
firm K2 Intelligence. Earlier this month, the ANA revealed that the
FBI had
recently contacted Reed Smith about the investigation in attempt to
get cooperation from ANA members. The ANA is leaving the
decision of whether to cooperate up to individual advertisers, but
suggests they do not talk to the FBI without a lawyer.

"If evidence is uncovered proving that the transparency issues
outlined in the K2 Intelligence report are fraudulent, criminal
charges can be brought against the media buying agencies and those
executives and employees who were involved," the whitepaper
says.

The paper suggests, as an example, if advertisers are being
overcharged or not being given even five percent of what they're
entitled, the annual cost to advertisers could be "staggering." It
says the primary statutory offenses likely at issue in the FBI
investigation are mail and wire fraud. Also discussed in the
whitepaper are fraudulent intent (examples including deceptive
conduct or deviation from known standards of conduct), conspiracy
(the conspiracy statute requires two or more people to agree to do
something unlawful, plus taking one or more overt acts to further
the scheme) and racketeering.

The FBI told Reed Smith that "merely raising a hand saying you
have been defrauded will not benefit its efforts," according to the
new whitepaper. It says meaningful cooperation means doing an
internal investigation and, if fraud exists with evidence, to let
the FBI know.

So, the question for advertisers is this: Cooperate or not?
According to the ANA's whitepaper, some ANA members have expressed
concern that cooperation will result in being "blackballed" if
their cooperation becomes known. The paper says the FBI is
sensitive to protecting the advertising community consistent with
its legal and investigative obligations.

The potential benefits of cooperating are both monetary and
otherwise, the whitepaper says. "If criminal cases are brought, the
likely result will be far more transparency going forward and
industry-wide reform," it says, but financial benefits may also
occur since victims of crimes are entitled to restitution.

"Even if the Department of Justice decides not to indict any
agency, intermediate steps may be taken that will benefit the
advertising industry," the paper says. "These can include deferred
prosecution agreements and non-prosecution agreements where
restitution is still mandated. Lastly, unless advertisers engage in
an internal investigation, they may never learn whether they have
been defrauded. If they have been, apart from any potential
financial benefits of pursuing claims or restitution, an increased
knowledge of what occurred will improve the advertiser's
negotiation powers going forward."

The 4A's, in a statement issued by a spokeswoman, said it has
nothing further to add. "As a practice, we don't comment on ongoing
investigations," it said.

If you see something, say something

One more thing before we move on to this week's agency news: It
feels like a good time to remind you that there are many ways you
can get in touch if there's something you think I should know
— I don't mean press releases, but tips or things you want me
to dig into. You can always email me at [email protected] If
you're concerned with anonymity, I have an encrypted email at
[email protected] or you can send me an encrypted message on
Wire at @megancgraham. I'm here and I want to listen.

ANewCompanyForMildenhall

Jonathan Mildenhall has a new thing going: The former Airbnb CMO
has launched TwentyFirstCenturyBrand, his branding and marketing
consultancy, my colleague I-Hsien Sherwood reported this week. He
is joined by co-founders Alexandra Dimiziani and Neil Barrie.
Previously, Dimiziani was Airbnb's global marketing director and
Barrie was chief strategy officer at TBWA\Chiat\Day. The company
offers five verticals: Company mission and values; brand blueprint;
go-to-market planning; marketing org design; and outsourcing agency
management. It is currently working with Arianna Huffington's
Thrive Global, Sean Parker's Airtime, Pinterest, GoDaddy and
WeWork.

Christmas comes early for this agency

The Richards Group has won the Hobby Lobby account following a
review. Earlier this month, the brand began running its holiday
campaign, "Christmas Is What You Make It," which will run through
Dec. 25. Check out a long-form version of the video, which depicts
a young girl (who has some serious sweater style) crafting a quilt
for her rural family's recently shorn sheep, below.

One sick campaign

Goodby Silverstein & Partners has created its first campaign
for San Francisco-based independent primary-care organization One
Medical. The campaign, called "Sick Cities," includes 130 different
ads for places where getting sick or injured is easy, like Times
Square or the Sunset Strip.

BB&Tombras

Financial services holding company BB&T has tapped
Knoxville-based agency Tombras as its new agency of record.
BB&T has more than 1,900 financial centers in the country. The
shop's responsibilities will span strategic planning, brand
creative, media planning and buying and digital.

On the move…

Havas Group Media has tapped Bret Leece as its chief data and
innovation officer and will be based in New York. Leece was
previously president of M1 at Dentsu Aegis Network.

J. Walter Thomas Lisboa has brought on Andre Felix —
formerly a digital creative director at The Walt Disney Co. in Los
Angeles. Felix will be an executive creative director at JWT.

BBDO has named St. John Walshe as CEO of BBDO The Americas and
Jim Moser as chairman of BBDO Europe. Chris Thomas, who was
previously the CEO of BBDO for the Americas, is "leaving BBDO to be
closer to his friends and family in Singapore and Australia," a
spokesman said.

Josh Fell, LA-based chief creative officer at Anomaly, has been
promoted to partner at the agency. Fell joined the agency earlier
this year. "I have no idea how I tricked so many smart people into
making such an absurd decision … But I couldn't be happier
that they did," he said in a statement.

Megan Graham is an agency reporter at Ad Age. Prior to joining Ad Age in 2017, she covered technology and startups for the Chicago Tribune's Blue Sky Innovation section. Earlier in her career, she covered business and breaking news at the Chicago Sun-Times. Originally from Chicago, she earned her B.A. in news-editorial journalism from the University of Illinois at Urbana-Champaign.